The UK Financial Conduct Authority (FCA) has fined Barclays Bank UK PLC, Barclays Bank PLC and Clydesdale Financial Services Limited (Barclays) £26 million for failures in their treatment of consumer credit customers who fell into debt or experienced financial difficulties.
The UK watchdog found that Barclays pro-actively redressed these customers, paying over £273 million to at least 1,530,000 customer accounts since 2017.
Mark Steward, Executive Director of Enforcement and Market Oversight, commented:
Consumers should feel reassured that their lender will work with them to help resolve any financial difficulties, whereas Barclays’s poor treatment of its customers risked making these difficulties worse.
Steward added:
Firms must treat consumer credit customers fairly, including when they find themselves in arrears. We will take action against unfair treatment, or where firm systems expose customers to the risk of unfairness. While this case predates the pandemic, this message is especially important as the impact of coronavirus continues to affect household incomes and budgets.
The FCA stated that between April 2014 and December 2018 some retail and small business customers who had been offered consumer credit were treated poorly when they fell into debt. The regulator found that Barclays failed to treat customers fairly or to act with due skill, care and diligence.
According to the FCA, Barclays failed to follow its customers’ contact policies for customers in debt. Moreover, Barclays did not have the appropriate conversations with customers to help them understand the reasons for their situation and failed to understand the customers’ circumstances leading it to offer unaffordable, or unsustainable, forbearance solutions.
The UK regulator responded:
The FCA requires consumer credit firms to take adequate measures to properly understand customers’ financial difficulties. It also requires firms to show forbearance and due consideration to customers in arrears or in financial difficulties. Otherwise, a customer under financial pressures could end up making payments on a consumer credit loan at the expense of a priority debt, such as a mortgage, council tax, child support and utility bills.
The FCA noted that Barclays identified some of the problems in 2014, but due to systems and controls failings these were not fully rectified. Since then, measures to resolve the problems were subsequently taken and the bank has contacted all customers whom they think may be due for compensation. The FCA has monitored this programme.
When setting the fine, the FCa took the redress programme into account. Barclays has not disputed the findings and has agreed to settle the case. As a result, the bank qualified for a 30% discount and the financial penalty would otherwise have been £37,223,500.
The fair and appropriate treatment of customers in financial difficulty has been a focus for the FCA. The Authority has stated that it is working to ensure that firms raise their standards in this area.
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